Coinbase is about to debut on the stage, can it "amazing" Wall Street?

Original title: Coinbase will debut on the stage tomorrow, can it "amazing" Wall Street?

When digital currency exchange Coinbase goes public on Wednesday, its valuation will reach astronomical levels, according to CNBC. But if you ask 10 market experts what to say about the company, you might get 10 different answers.

That's because Coinbase's current business is built almost entirely on top of bitcoin and ethereum. For the first quarter, Coinbase's projected revenue topped $1.8 billion and net profit topped $800 million.

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If Coinbase went public at its latest private market valuation of around $100 billion, it would instantly become one of the 85 most valuable U.S. companies.

Nasdaq sets the reference price of Coinbase at $250: Jinse Finance reported that Goldman Sachs and Nasdaq have set the reference price of Coinbase’s direct listing at $250 per share. This figure is 27% lower than Coinbase’s last traded price ($343.58 per share) on the private secondary market. Assuming an estimated 266.2 million shares outstanding, it should be valued at $66.5 billion. [2021/4/14 20:16:32]

According to a previous report by Bitui, the Nasdaq Exchange announced on Tuesday that the reference stock price of Coinbase’s “COIN” stock is $250 per share. The reference price is determined by Nasdaq with a consulting financial advisor (in this case Goldman Sachs) and is usually the price at which the company was last traded in the private market, Coinbase last traded at $343.58 per share on the private secondary market , the reference share price is 27% lower than that price. Coindesk estimates that Coinbase is valued at $66.5 billion, assuming an estimated 266.2 million outstanding shares.

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The key question for investors ahead of a Nasdaq listing is: When a crypto company with a history of outlier growth, enormous uncertainty, and no formal headquarters competes with Wall Street's crucible and familiar metrics like the price-to-earnings ratio ) conflict, what happens?

Natalie Hwang, founding managing partner of investment firm Apeira Capital, said: "Valuating any startup can be challenging, but I think for a company like Coinbase, the valuation problem is much more complicated."

Coinbase has 27 bullet points about volatility risk in its prospectus. These include changes in investor sentiment, negative publicity and social media coverage, regulatory concerns and service outages related to the technology.

Matthew Le Merle, managing partner of investment firms Fifth Era and Blockchain Coinvestors, said tying Coinbase's value to bitcoin is like valuing Amazon based on book sales in the early days.

Regardless of what the future holds, Coinbase's revenue, at least for this year, will largely depend on trading volume, which currently correlates closely with bitcoin's price. Coinbase charges fees for transactions, and transaction fees vary depending on the size of the transaction.

Competition from the likes of Kraken, Gemini and Binance will erode Coinbase’s future fee income, leading to a “race to the bottom” similar to stock trading, equity research firm New Construction wrote in a report last week. Based on its analysis, Coinbase should be valued at $18.9 billion, 81% below expected market capitalization, the firm said.

New Constructs wrote: “As the cryptocurrency market matures and more companies inevitably pursue Coinbase’s high profit margins, the company’s competitive position will inevitably deteriorate. Competitors may offer lower deals fees, or zero transaction fees, as a strategy to capture market share.”

Research and trading firm Susquehanna is much more bullish on Coinbase, estimating its market capitalization at between $96 billion and $108 billion.

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